Sir Pipsalot's Tuesday Market Update 03-23-2010

Sir Pipsalot

Former FPA Special Consultant
Hey folks,

The EUR/USD has managed just over 100 pips of a rally off its lows setting itself up nicely for a sell here as discussed yesterday in the 1.3540-1.3570 range. I plan to use a 50 pip SL and 50 pip initial TP, then move it to BE.

Fundamentally, guys... the Eurozone is in some deep trouble. Based on the research we've been paying close attention to and the insight we've been providing in the Profit Mongers room, I believe the Euro may end up dissolving slowly but surely... or at least dramatically changing in form for the worse over the long term. There is just no mechanism to deal with the Greece debt crisis, or any internal crisis for that matter, and no will to devise one. Feel free to read John Mauldin's latest newsletter for an excellent recap of this situation:
Has Germany just killed the dream of a European superstate? - John Mauldin's Outside the Box - | Financial Intelligence, Advice & Research / Investment Strategies & Planning for Individual Investors.

Stocks have bounced up a bit and as I mentioned yesterday, they're not a bad option for a riskier short around here, but a higher probability trade that I'm waiting for is confirmation of a more concrete turn south that currently would require a break to 1136 and below on the S&P 500 futures (ESM0). I'm largely ignoring the healthcare fiasco as the market will rally or fall of it's own accord and use the healthcare bill as it's excuse for the move either way.

In news Tuesday, we will see a couple of reports to start off the economic news week:

0530 UK CPI y/y (expected at 3.1%) - This report recently has been shooting 40 pips or so then retracing hard when it hits a decent trigger, but with inflation taking a bit more of the center stage, I don't think it's safe enough to trade the pattern and sell against an upmove or buy a dip after a bad number. I think the best bet is to try to get in along with the surprise within 20 pips of prerelease and snag some pips off the end of the move and see if it will extend further while trailing your stop. I would avoid entering if there's a discrepancy with the monthly figure.
If it comes out at 3.3% or higher, GBP/USD should rally 40+ pips
If it comes out at 2.9% or lower, GBP/USD should fall 40+ pips

1000 US Exisiting Home Sales m/m (4.99M expected) - Usually I'd say this is good to trade on USD/JPY with about a 0.25M trigger, but housing has really been overshadowed lately by political issues, debt, spending, and interest rates. It may be worth trying to get in on a good surprise at a solid price perhaps, but I think it's safer to watch this one and if it strikes a chord, take some notes for next month.

That's all for today's update. If you'd like to learn more about trading or trade along with myself and my collegues, come join us at Profit Mongers. Our subscription is very reasonable at $179 per month, and right now you can sign up for a 2 week trial to get started for only $29. This offer is for new customers only. If you have any questions, you can also email me at

To our success!
Sir Pipsalot